Compact for growth and jobs

Compact for growth and jobs: a means to revive economic growth and employment in the euro area and across the European Union

The compact for growth and jobs, adopted by EU leaders in June 2012, provides a coherent framework for action at national, EU and euro-area levels. The ultimate aim is to make the European economy more competitive by relaunching growth, investment and employment. Under this compact, EU member states committed to tackling unemployment and addressing the social consequences of the crisis effectively, pursuing reforms to improve employment levels and stepping up efforts to increase youth employment. Another aim of the compact is faster progress towards the goals set out in the Europe 2020 strategy. The European Council is responsible for steering the implementation of both the compact and the Europe 2020 strategy, through the European Semester process.

In the first months of 2012 EU leaders agreed on a number of initiatives, particularly aimed at promoting youth employment opportunities. They decided to redirect available EU funds to help young people receive a good quality offer of employment, continued education, an apprenticeship or a traineeship after leaving school. They agreed to help early school-leavers with getting into training as well as with making full use of the job-mobility portal EURES to find employment opportunities in other countries. They offered support for business starters and social entrepreneurs and with boosting job creation in small and medium-sized enterprises. Moreover, the EU leaders agreed on incentives for employers to hire people. Among other things these include reducing administrative burdens and reviewing labour taxation.

Deepening the single market is a key factor in promoting growth and jobs. The compact contains an extensive list of tasks in this area, including initiatives to complete the digital single market by 2015, complete the internal energy market by 2014, reduce the regulatory burden at both EU and national levels, strengthen the European Research Area, and explore the potential for jobs in the green economy.

The compact mobilised €120 billion for immediate investment in the EU economy. This includes a €10 billion increase in the capital of the European Investment Bank, which will increase its overall lending capacity by €60 billion. The other €60 billion comes from EU structural funds (€55 billion) and a pilot initiative for project bonds (nearly €5 billion). The investments should be used primarily for knowledge and skills, strategic infrastructure and facilitating access to finance for small and medium-sized enterprises. In the compact, member states agree to use the EU budget more efficiently for growth and job creation, especially in the areas of research, education and green technologies. The Multiannual Financial Framework for 2014-2020, as adopted by the European Council in February 2013, substantially increased financing for research, innovation and education.

With the compact, leaders commit to moving rapidly on the Commission's concrete proposals in the 2012 employment package. The employment package highlights the priorities of addressing youth unemployment and increasing the mobility of workers within the EU, and encourages member states to implement a number of initiatives at national level to tackle unemployment and address the social consequences of the crisis effectively.

External trade is another area with great potential for furthering growth in the EU — especially bilateral trade relations. In the compact, leaders agreed to work towards further free-trade agreements with external partners, better market access, appropriate investment conditions, the protection of intellectual property and the opening up of public procurement markets. The EU concluded a free-trade agreement with South Korea in 2011 and is currently negotiating similar agreements with Singapore and Canada. Negotiations with Japan will be launched within the next months. In addition, on 13 February 2013 the European Union and the United States announced that each will shortly initiate the internal procedures necessary to launch negotiations on a Transatlantic Trade and Investment Partnership